Can government provision of a good result in its overproduction? Explain
Yes. Representatives may not be able to accurately measure their constituents' costs and benefits, or may
not even bother to try to accurately measure their constituents' costs and benefits. This can lead them to
vote for the provision of more of the good than is socially optimal. Also, representatives may favor the
desires of special interest groups, to the detriment of society as a whole. If a special interest group lobbies
for over-provision of a good, the government may overprovide that good.
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The unemployment rate will decrease whenever there is a(n) _____
a. increase in the number of persons classified as unemployed b. decrease in the number of unemployed persons relative to the size of the labor force c. decrease in the size of the population and no change in the number of persons classified as employed d. reduction in the size of the labor force e. decrease in the number of unemployed persons and no change the population
Profits not paid out to stockholders are
a. retained earnings. b. known as dividends. c. the denominator in the price-earnings ratio. d. All of the above are correct.